Ross bails Cosalt out – until his offer ends

DAVID Ross, chairman of safety gear supplier Cosalt, rode to the loss-making company’s rescue yesterday with a deal to provide it with £5m of emergency working capital to keep it afloat.

Ross, whose grandfather founded Cosalt a century ago, has made the funds available from his Oval investment vehicle but warned that he would only bail the firm out further if shareholders accept his offer to buy it for £400,000, or 0.1p per share.

The £5m unsecured funding is expected to tide Cosalt over until at least until Ross’s offer expires on 22 December. If shareholders do not support his offer by that date the money will have to be paid back.

A Cosalt spokesman said the funding was “reassuring for the company”.

Ross’s takeover offer has the support of Sovereign Holdings, which owns 18 per cent, while Ross holds 15 per cent himself.

But his deal upset long-term institutional Cosalt shareholders, who saw their stocks priced at 140p just three years ago. They blame Ross for a huge drop in the share price, caused by a highly dilutive equity placement forced through as he returned to chair the firm in 2009.

The £18m share placement was priced at just 5p per share, an 84 per cent discount to the 31p share price at the time, and added 378m new shares to the 25m in issue at the time.

Ross first joined Cosalt’s board in 2005 but resigned in 2008 after he was found to have pledged shares of several companies as collateral against personal loans.

Grimsby-based Cosalt had grown to a sprawling conglomerate after an acquisition spree, but has now sold off many of its non-core assets and refocused on its core businesses of safety equipment for fire brigades and heavy industries such as oil and gas.

It is loaded with more than £14m of debt and a £9m pension scheme deficit and has burned through its working capital facilities as its business units continue to turn a loss.

Repayment of the £5m facility will also be triggered by a change of control, any refinancing of Cosalt’s bank facilities – or if the company starts insolvency proceedings.

Yesterday shares rallied nearly 18 per cent on the news, to close at 0.23p.


DAVID Ross founded Carphone Warehouse with his schoolfriend Charles Dunstone in 1989 and has since experienced both the highs and lows of business life.

Educated at Uppingham School and Nottingham University, Ross qualified as a chartered accountant with Arthur Andersen until leaving for Carphone Warehouse.

He helped lead the phone retailer from strength to strength and oversaw its IPO in 2000, which raised £185m and valued the firm at £1.6bn.

But it hasn't all been plain sailing for the entrepreneur, a prominent supporter of Prime Minister David Cameron.

Three years ago he resigned from four boards – as director of storage firm Big Yellow; chairman of transport group National Express and Cosalt; and deputy chairman of Carphone Warehouse – after using several million pounds-worth of his shares as collateral against personal loans without notifying the companies. He also stepped down as an adviser to London mayor Boris Johnson on the 2012 Olympics.

The Financial Services Authority cleared him of wrongdoing in January 2009, allowing him to return to Cosalt’s board.

Ross was also questioned by police in late 2009 after a Lithuanian escort girl alleged that she was assaulted outside his Belgravia home one night.

Sniezana Kobeniak claimed to have been called to the property and said she was bruised during an altercation while being turned away. Ross, who had returned to the house after a party, denied all wrongdoing and the claim was later dropped.

The great-grandson of Thomas Ross, one of the founders of Cosalt in 1873, Ross is now fighting to keep the company afloat and has offered to pay £400,000 to take it private. But the offer has angered some shareholders, who say Cosalt was worth £40m in 2009 when Ross became chair.